Here is Kenneth Rogoff of Harvard arguing that this kind of trade protectionism may rear its ugly head in the very near future:
G-20 leaders who scoff at the United States’ proposal for numerical trade-balance limits should know that they are playing with fire. The US is not making a demand as much as it is issuing a plea for help.There is much more to Rogoff's article. Read the whole thing.
According to a recent joint report by the International Monetary Fund and the International Labor Organization, fully 25% of the rise in unemployment since 2007, totaling 30 million people worldwide, has occurred in the US. If this situation persists, as I have long warned it might, it will lay the foundations for huge global trade frictions. The voter anger expressed in the US mid-term elections could prove to be only the tip of the iceberg.
Protectionist trade measures, perhaps in the form of a stiff US tariff on Chinese imports, would be profoundly self-destructive, even absent the inevitable retaliatory measures. But make no mistake: the ground for populist economics is becoming more fertile by the day.
The new US Congress is looking for scapegoats for the country’s economic quagmire. And, with a president who has sometimes openly questioned rigid ideological adherence to free trade, anything is possible, especially in the run-up to the 2012 presidential election. If trade frictions do boil over, policymakers may look back on today’s “currency wars” as a minor skirmish in a much larger battle.
These are dangerous times. Obama made them more dangerous by not focusing on getting the US economy recovered but instead focused on health care. The new crop of TEA party fanatics along with the rest of the antediluvian Republicans are likely get blue dog Democrats to join them in creating a Smoot-Hawley "look alike" with some legislation to cut down on trade. The Great Recession still stands a good chance of becoming Great Depression II.